Day: September 20, 2024

At the end of its first year of trading on 30 June 2021 Alex Ltd’s net assets are £207,594.

It has share capital of £50,000 made up of 25p equity shares issued at 40p each, and a retained profits reserve of £107,594.

In relation to Alex Ltd’s balance sheet as at 30 June 2021 which of the following be true?

Select ONE answer:

1. It has a general reserve of £50,000
2. It has share premium of £100,000
3. It has a general reserve of £20,000
4. It has share premium of £50,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == > Share capital + Share Premium of £30K + profit reserve + General Reserve (Balance Number) = Closing position
4. Not correct

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